SINGAPORE - Buyers of residential properties now have to pay higher additional stamp duties, after the Government announced a fresh round of cooling measures late on Wednesday night in a move to “promote a sustainable property market”.

In a joint statement, the Ministry of Finance, National Development Ministry and Monetary Authority of Singapore said the Additional Buyer’s Stamp Duty (ABSD) rate for foreigners buying any residential property will be raised from 30 per cent to 60 per cent - the highest increase.

The rate will be raised from 17 per cent to 20 per cent for Singapore citizens buying their second residential property, and from 25 per cent to 30 per cent for those buying their third and subsequent property.

Singapore permanent residents (PRs) buying their second residential property will see the rate rise from 25 per cent to 30 per cent, and from 30 per cent to 35 per cent for third and subsequent properties.

Entities or trusts purchasing any residential property will pay a rate of 65 per cent, up from 35 per cent. This will not apply to housing developers.

Based on 2022 data, the increases will affect about 10 per cent of residential property transactions.

This is the third round of cooling measures in the past 16 months. The Government said that while the earlier two rounds of measures in December 2021 and September 2022 have had a moderating effect on the market, property prices showed “renewed signs of acceleration amid resilient demand” in the first quarter of 2023.

“Demand from locals purchasing homes for owner-occupation has been especially strong, and there has also been renewed interest from local and foreign investors in our residential property market.”

“If left unchecked, prices could run ahead of economic fundamentals, with the risk of a sustained increase in prices relative to incomes.”

According to flash estimates from the Urban Redevelopment Authority, private home prices gained 3.2 per cent in the first quarter of 2023, compared with 0.4 per cent in the fourth quarter of 2022. Year-on-year, prices rose by 11.3 per cent last quarter.

The Government said ABSD rates for citizens and PRs purchasing their first residential property - which constitute about 90 per cent of residential property transactions - will remain at 0 per cent and 5 per cent respectively.

In December 2021, the Government raised the ABSD rate for home buyers and developers, among other measures. The ABSD was hiked from 12 per cent to 17 per cent for citizens buying their second residential property, and from 15 per cent to 25 per cent for those buying their third and subsequent properties.

In September last year, it tightened the criteria to assess borrowers’ ability to repay, and therefore qualify for, housing loans granted by private financial institutions and by HDB.

The loan-to-value (LTV) limit for HDB housing loans was lowered from 85 per cent to 80 per cent, meaning buyers could borrow less than before.

Current and former owners of private residential property had to wait for 15 months to buy a non-subsidised HDB resale flat, in a move to moderate demand in the HDB resale market.

On Wednesday, the Government said the higher ABSD rates will apply to all residential properties acquired on or after Thursday, April 27.

There will be a transitional provision, it said, where the ABSD rates on or before April 26 will apply for cases that meet all the following conditions: The Option to Purchase (OTP) was granted by sellers to potential buyers on or before April 26, 2023; this OTP is exercised on or before May 17, 2023, or within the OTP validity period, whichever is earlier; and this OTP has not been varied on or after April 27, 2023.

The authorities added that the higher ABSD rates to moderate investment demand will complement efforts to ramp up supply to ease the tight housing market for both owner-occupation and rental.

The supply of private housing under the Government Land Sales programme has increased from 3,500 units on the Confirmed List in the second half of 2022 to 4,100 units in the first half of 2023. On the public housing front, HDB will launch up to 23,000 flats in 2023, and up to 100,000 new flats between 2021 and 2025.

In addition, there will be significant housing supply coming onstream over the next few years, the authorities said, with close to 100,000 public and private residential units expected to be completed from 2023 to 2025.

“The latest measures have been calibrated to moderate housing demand while prioritising owner-occupation, and provide sufficient housing supply,” the authorities said. “The Government will continue to adjust our policies as necessary to ensure that they remain relevant, and promote a sustainable property market.”